Can the non-compete restrictions for Dermani Medspa be waived or altered, and if so, under what circumstances?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
(b) Member covenants and agrees that during the term of the Area Development Agreement, except as otherwise approved in writing by Franchisor, Member will not, either directly or indirectly, for him or herself, or through, on behalf of, or in conjunction with any person, persons, partnership, corporation, or entity:
(i) develop, build, own, maintain, operate, manage, engage in, franchise, or license, or have any direct or indirect controlling or non-controlling interest as an owner – whether of record, beneficially, or otherwise – in medical spa centers or businesses that offer medical spa products or services substantially similar to those then offered by dermani MEDSPA®s ("Competitive Business");
11.07.
Waiver.
No term or condition of this Agreement shall be deemed to have been waived except by written instrument of the Party charged with such waiver.
- 9.1.6. Equity ownership of less than five percent (5%) of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange will not be deemed to violate this Section 9.
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to Dermani Medspa's 2025 Franchise Disclosure Document, the non-compete restrictions can be waived or altered under specific circumstances. During the term of the Area Development Agreement, the member is restricted from engaging in any Competitive Business, unless otherwise approved in writing by Dermani Medspa. This indicates that Dermani Medspa has the discretion to provide written consent, effectively waiving or altering the non-compete restrictions during the agreement's term.
Additionally, the franchise agreement states that no term or condition of the agreement shall be deemed to have been waived except by written instrument of the Party charged with such waiver. This clause provides a formal mechanism for waiving any provision of the agreement, including the non-compete clause, but it requires a written agreement from Dermani Medspa.
Furthermore, the document mentions that equity ownership of less than five percent (5%) of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange will not be deemed a violation of the non-compete agreement. This implies a specific alteration or exception to the non-compete restrictions, allowing for minor investments in publicly traded competitors. Therefore, while the non-compete is generally strict, Dermani Medspa retains the right to grant waivers in writing and has defined a specific exception for minor, passive investments in publicly traded companies.